City solicitors Rowe & Maw have issued a millennium warning to company directors, trustees and fund managers over final salary pension schemes.
Rowe & Maw pensions partner Andrew White is says by April 2000, final salary schemes must have produced their first actuarial valuation to confirm they meet minimum funding requirements.
He warns that if the scheme has a deficit of less than 10 per cent from the MFR then they have until April 2007 to make up[ the shortfall.
But for schemes with a deficit of more than 10 per cent of the MFR, the shortfall needs to be made up by April 2003.
White says as an employer withdrawing from an underfunded scheme must rectify the shortfall with an immediate cash injection. He believes this could be a dangerous trap for unwary companies looking to takeover or purchase a business.